Chinalco, Rio Tinto to take "world-class iron ore" to break iron ore monopoly

After the Wuhan Iron and Steel Group and Venezuela reached the first "China price" this year, Chinese enterprises to expand overseas mining has a new breakthrough.　　Yesterday (July 29), China Aluminum Co., Ltd. (hereinafter referred to as China aluminum) and Rio Tinto Group in the Great Hall of the Chinese formal signed a binding agreement, the two sides will form a joint venture to develop in Guinea's Simao du Fu Iron project.　　The move, a number of analysts said, would make Chinalco a step closer to the strategic goal of an international polymetallic mining company and diversify its sources of iron ore, which would have a strong impact on the monopoly of international miners. Chinalco's total investment of $1.35 billion in March this year, Chinalco's parent company signed a memorandum of understanding with Rio Tinto on non-binding cooperation, announcing that the two sides will jointly develop the Rio Tinto-held world-class iron ore project in West Africa, Guinea.　　July 29, Chinalco and Rio Tinto Group formally signed a binding agreement. According to the agreement, Chinalco and Rio Tinto set up a joint venture under the 47%:53% stake, holding 95% per cent of the project, with the remaining 5% per cent owned by the International Finance Corporation. In the next 2-3 years, Chinalco will gradually devote a total of 1.35 billion U.S. dollars to the JV company for Project capital expenditure. Under the terms of the agreement, Rio Tinto will continue to be responsible for the development of the Simao project, and Chinalco will dispatch relevant personnel to assist in the management and operation of the project.　　In addition, the two sides jointly set up a joint venture sales company, responsible for the project's iron ore sales. It is reported that Simao du is currently the world's largest untapped iron ore deposits, iron ore reserves of about 2.25 billion tons, grade reached about 65%.　　Once fully operational, the mine is expected to have an annual output of over 70 million tonnes of high-grade iron ore and give priority to China's market demand. "may become a new profit growth point" an unnamed senior executive at China Aluminum Guangxi Branch said Chinalco has ended 12 months of continuous losses since last August. "The 2010-year quarter has achieved overall profitability, including operating income growth of 154% year-on-year, the profit growth of 117%."　　"My Steel network consulting editor-in-chief Yuliangui in an interview, said that at present, the domestic aluminum production capacity of the overall surplus, the future development prospects are not broad, the Chinese aluminum industry in recent years, the benefits are not very ideal." "Although the Chinese aluminum industry began to profit, but in the export shrinkage, the domestic downstream demand is not flourishing background, the non-ferrous metal industry, the grim trend of overcapacity will drag enterprises to achieve profit growth rate."　　Zhao Lu, analyst at the China-Commerce circulation Productivity Promotion Center, believes that the current business changes in Chinalco will inject new energy into the business. "The signing means Chinalco has begun to look for a strategic transition, with the intention of intervening in non-ferrous and ferrous metals." At present, the main industry of Chinalco has passed the best period of gold, this new attempt may become a new profit growth point.　　"Shi Hengqun Securities Industry Analysis, said. "The successful cooperation with Rio Tinto in the development of the Simao Society project is an important step for Chinalco in the adjustment of its own industry and a clearer picture of Chinalco's entering the iron ore fieldConfidence and firm pace.　　"Zhao Lu said.　　To diversify the source of iron ore customs data show that the first half of this year, China's imports of iron ore 310 million tons, an increase of 4.1% per cent, but the import average price rose sharply, the import average price of 111.5 U.S. dollars/ton, up 47%.　　The monopoly of international miners seems to have found the life of Chinese steel companies, pushing global steelmakers to gradually move from quarterly pricing to monthly pricing until index pricing is intended to push the iron ore index pricing system forward. The successful development of the SIMAO project will effectively increase the global iron ore supply, balance the global iron ore market pattern and promote the long-term, stable and healthy development of the global iron ore industry. This has important and positive significance for both parties to the transaction and the whole iron ore market.　　"China aluminum industry general manager, China Aluminum Industry chairman, CEO Xiong said." Over the years, China's iron ore imports mainly from Australia, Brazil and India three countries. The successful cooperation of the SIMAO project will make the source of iron ore more diversified, and the price system will be more diversified, which will break the double monopoly of the three Giants ' supply and price of iron ore. Liang Yun Futures steel researcher Huara said that the significance of Chinalco and Rio Tinto cooperation is greater than its actual value, which has led to a change in the world's iron ore supply and demand pattern, "China's future iron ore negotiations in an increasingly advantageous position." ”